Unfiled Tax Returns FAQ's - Legacy Tax & Resolution Services

Unfiled Tax Returns FAQ’s

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Unfiled Tax Returns FAQ’s

1) How Do I Determine If I Need to File A Tax Return?

A: Whether you needed to file for a certain year depends on your age, filing status, and income for that particular year. Each year the IRS lists in Publication 17 the filing requirements.

2) What Are Consequences of Not Filing A Tax Return?

A: There are several consequences for failure to file a tax return. Failure to File Penalty: You could face a failure to file penalty of 5% per month (no more than 25%) on any unpaid balance. Opportunity Lost: If you fail to file a tax return, may lose carry-overs and tax benefits, running of the audit statute clock, and inability to discharge taxes in bankruptcy. Lost Refunds: You only have 3 years from the due date to file a return and receive a refund. Potential Lose of Freedom: Most important, although rare, you could face a fine of up to $25,000 per unfiled tax return and go to jail up to a year. Eventually the IRS will file a tax return for you called a “SFR” or Substitute for Return (SFR). An and SFR, IRS will recognize all income and allow very few deductions. The SFR liability is typically substantially high then if you have filed the return.

3) If I Have a Bunch of Unfiled Returns, Should I Just File Them as I Get The Done?

A: In our opinion no! If you file them as you complete them, the IRS will assess them as they are filed. Once they have assessed the tax, they will begin to collect the tax. For our client, we prepare all the return first, determine the total balance, and formulate a payment Action Plan. Once we have that Resolution Action Plan established, all returns are filed at once (in separate envelopes). If you trickle in returns, you are setting yourself up for misery.

4) What If I Lost My W-2 Documents and 1099s for the Particular is There Something I can Do?

A: Yes, first try to retrieve them from the original source. If you are having no luck, you can call the IRS at 1-800-829-1040, request the Wage & Income and Account transcript. Although the IRS cannot provide you actual W-2s or 1099s, using the W & I and Account transcript, you will have enough information to prepare a return.

5): What Are Different Ways The IRS Contacts Individuals Who Do Not File?

A: The IRS typically starts off by sending you a letter or notice in the mail at your last known address. Letters or “CPs” may let you know that not only did you not file, but that you have a balance due, a hold on a refund, and more. If you do not respond to these letters, then they may follow up with a phone call or a letter telling you that you have 30 days to get your returns filed. If you fail to take corrective action after this, collection efforts may start. In extreme cases, you will get a telephone call or visit from an agent. Many times, if you still do not get your returns filed, the IRS will fill complete one for you.

6) Do I Still Need To File Even If I Do Not Owe the IRS?

A: Technically, if you do not owe the IRS you do not need to file a tax return. You will not be hit with the 5% failure to file penalty. However, there are many other disadvantages (discussed above) if you do not file.

7) Are Penalties and Interest Deductible on my Tax Return?

A: No, tax penalties are never deductible on a tax return but interest may be, if the interest is related to taxes not paid by a business.

8) How Should I Send Late Tax Returns to the IRS?

A: You used to be able to hand deliver to the service center, however recently the service center will no longer accept them. You must look up the mailing address based on your area of the country.

9) If the IRS has filed a Substitute for Return (SFR), Can I Still File an Original Return?

A: Yes you can and in most cases, should. Understand that a replacement return in some parts of the country for Bankruptcy purposes is not considered a return.

10) When I File the SFR Replacement, Does it Get Address to the Normal Service Center?

A: No! It must be file to a special unit at the IRS. It is best to call 800-829-1040 to get this address. Failure to do so will cause significant delay or cause your return not to be processed at all.

11) Can You E-File A Late Tax Return?

A: Depends. You can typically efile a late tax return up until the IRS’s extension deadline of October 15th. After October 15th, you will need to send it via mail.

12) Is It Ever Too Late To File? How Long Can It Be and Yet Still Receive A Refund?

A: It is never too late to file. You will have up to 3 years from the due date of a tax return to request a refund. Once three years has gone by, you cannot request your refund or receive a benefit of that refund.

13) If I Am Filing A Past Due IRS Tax Return, Can I Use the Current Year’s Tax Form (1040)?

A: No, you will need to use the tax form for the year you are filing.

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